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Rents shrug off stamp duty hit to commercial property in March

The stamp duty tax changes announced in the Budget reduced overall commercial property capital values in the UK, according to the latest CBRE Monthly Index, but rental values grew more in March than in January and February combined.

However, after three years of continuous growth for the sector, capital values fell by 0.4% in March, as the new tax bands increased acquisition costs for properties valued at over £1.05m. Rising acquisition costs affected capital values, which were growing at a rate of 0.2% in February before the new stamp duty charges were announced. The changes have helped those with smaller properties, offering a net benefit to sites valued at under £1.05m but came as a blow to investors in large commercial properties. The impact on overall capital values, which have grown by 28.4% over the past three years, is a one-off, says CBRE.

Some areas and sectors have been harder hit than others. Offices in the City of London experienced the greatest month on month fall in capital values, with February’s strong monthly growth of 1.7% falling to a 0.2% contraction in March. Overall, offices saw capital value growth slow from 0.6% to -0.1% over the same period. In the retail sector values fell by 0.7%.

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